Author: shanhuang

Wall Street, Washington and Asia Economic Crisis [Copy link] 中文

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Post time 2006-5-20 20:17:27 |Display all floors

Reply #20 flotsam's post

Your last post is very informative and interesting to read. Thank you, flotsam.

It seems that everyone knows the fundamental flaw of the dollar system. But at the same time people are still use it or buying it.

My observation is that no one want to upset the system because a collapsed dollar would cause trouble for everyone.

This may also because international finacial systems are firmly in control of the gansters, no nation, even China or Japan, can really do much about it.

What's interesting is that I read from Xinhua that some Asia countries including Japan, Korea and China, etc. are working to create a unified Asian Yuan system like Euro. Although Japan has its political motivation in promoting such system, China and other Asian countries are actually moving along with it.

I thought it is an interesting development. Let me know your view.

[ Last edited by shanhuang at 2006-5-20 08:21 PM ]

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Post time 2006-5-20 20:58:43 |Display all floors
News:   US is behind the gold price hike, not China

It is the end of the US housing boom that caused large amount of hot money to rush to resource commodities like gold, oil and bronze and cause the sharp price rise of these commidities. China's demand didn't affect that much.

Guan Qingyou from Chinese Academy of Social Sciences gives further analysis to this conclusion in his article. It says that although the US Federal Reserve has increased interest rate for 16 consecutive times since June 2004, the international market hasn't reacted as expected. Prices of international resource commodities such as gold, crude oil and bronze continue to wildly go up. New York's COMEX gold has created a record high of 728 US dollars per ounce since 25 years ago.

In recent years, it is almost a common practice in the international market that whenever there is a price hike of resource commodities, people will attribute China's demand to the result. The recent news that China is going to establish strategic commodities reserve has become the main theme of the international market.

Wall Street Journal claimed that China's hungry demand for resource commodities has made them the hot estate now in the international market.

But in fact, the US unclear foreign policy has aggravated the opportunists' investment. It is never very clear how much hot money is in the international market. According to International Monetary Fund, the hot money in 1997 was about 7.2 trillion US dollars. Currently there are 8000 hedge funds with a value of one trillion US dollars equivalent estate in the international market.

Large amount of opportunist capital floated to real estate and resource commodities after the burst of bubble in US new economy and the crash of the internet fairy tale. With the adjustment of real estate market by the Federal Reserve, resource commodities have become the only good choice for investors. With the coming of large amount of hot capital, almost all the resource commodities' prices have gone up. We have seen the prices of gold, oil and bronze go up drastically, but in theory, the supply and demand didn't change much.

Guan Qingyou predicts that before the hot money finds its next target, it will continue to put its capital into the resource commodities to keep its value.

Generally speaking, the price hike of resource commodities has no doomed relations with the international situation or so-called China's demand. If the price hike was due to demand, then it should be obvious with the framework of demand and supply. But current international market is far from the traditional demand and supply pattern.

A young American economist used to say that 'Hatred is sown.' Similarly, in the international market, 'the lies are spread'. When some people spread the lies, they must benefit from it. In international market, lies are repeated to influence investors' expectation and those who spread lies will benefit from such expectations.

Behind the floating money's behavior is the imbalanced international monetary system. Since the collapse of the Bredwood System, there is no other system in the international monetary system. After 1978, the Jamaican Agreement took effect and influenced the international monetary system. But the system is very loose. The International Monetary Fund in charge of international monetary order and coordination of international monetary relations didn't play its due role of preventing and helping to solve debt crisis and monetary crisis. While the US solely enjoys the tax of making currency, it doesn't like to shoulder the responsibility of maintaining and coordinating international monetary order.

As the launcher of the International Reserve Currency, the US has kept a low interest rate and issued too much US dollar currency. The excessive dollar has led to the over-growth of global currency through its double deficit, thus the international opportunist capital can greatly influence the international market.

Famous economist Robert Mondale has explained why we are in such an awkward situation. 'Through the currency development history, one of the main themes is that the country that has the peak financial power always refuses to conduct international currency reform because this will decrease its own monopoly power.' Like it or not, China has to continue to bear consequences brought about by the imbalanced international monetary system and Chinese people have to continue to bear the price hike of gold and oil.

By People's Daily Online

Can we see the scheme?!

[ Last edited by shanhuang at 2006-5-20 09:07 PM ]

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Post time 2006-5-22 08:48:08 |Display all floors

Dollar Hegemony

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Post time 2006-5-24 07:21:53 |Display all floors

BBC Lies Again

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Post time 2006-5-24 07:25:02 |Display all floors

It's Hedge Funds Bidding Up Commodity Prices

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Post time 2006-5-24 13:30:56 |Display all floors

Reply #25 flotsam's post

Thank you for the posts, the situation looks quite scary. I have noticed that Yahoo recently (several times) put down the stock charts which are all in RED for the last 10 days or so way below on its web page. How strange?!

What the article is saying is that the root of all evil is money, that the root of all money is the US FED and US treasury department printing bonds and dollars out of thin air. Inflation, by definition is the excess money supply over and above TRUE GDP. But what the US is doing is printing in excess of GDP and calling the devaluation of the dollar "growth". The massive expansion of the money supply in recent years has seen US interest rates fall to 1% and this all started BEFORE Sep11th. The propaganda claims that the FED cut interest rates in response to Sep11th which is untrue. US M3 has been expanding at about 8% per annum recently.

It is this massive increase in M3 which hit $10trillion before the FED stopped reporting it (the most important statistic of all). It is this increase in money supply which has caused bubbles in all asset classes; commodities, real-estate, bonds and stocks.


I agree. And for those who are not familiar with M3, like me, I digged out some information to share. Indeed, US FED stopped reporting M3, even wikipedia said it could be a coverup!

M0: The total of all physical currency, plus accounts at the central bank which can be exchanged for physical currency.
M1: M0 + the amount in demand accounts ("checking" or "current" accounts).
M2: M1 + most savings accounts, money market accounts, and certificate of deposit accounts (CDs) of under $100,000.
M3: M2 + all other CDs, deposits of eurodollars and repurchase agreements.

or,

(1) M1 COMPONENTS- Currency in circulation (plus traveler's checks), demand deposits, Negotiable Order of Withdrawal (NOW) accounts, and similar interest-earning checking account balances.

(2) THE NON-M1 COMPONENTS OF M2- Household holdings of savings deposits, small time deposits, and retail money market mutual fund balances (exclusive of balances held in IRA and Keogh accounts).

(3) THE NON-M2 COMPONENTS OF M3- Institutional money market mutual fund balances and managed liabilities of depositories consisting of large time deposits, repurchase agreements, and Eurodollars.

In the U.S., as of July 28, 2005, M1 was about $1.4 trillion, M2 about $6.5 trillion, and M3 about $9.7 trillion. If you split all of the money equally per person in the United States, each person would end up with roughly $30,000 ($9,700,000M/300M). The amount of actual physical cash M0 was $688 billion in 2004, roughly double the $328 billion in cash and cash equivalents on deposit at Citigroup as of the end of that year.

In a press release dated 10 November, 2005, the Board of Governors of the Federal Reserve System announced that it would cease publication of the M3 monetary aggregate. The Board stated that M3 "does not appear to convey any additional information about economic activity that is not already embodied in M2," and that the decision was reached largely because "the costs of collecting the underlying data and publishing M3 outweigh the benefits." It remains to be seen, however, whether this will be perceived as a minor policy change, or as a cover up for monetary expansion. -- wikipedia


I read an article from People's Daily, I think China is alarmed. I will try to find the article...

[ Last edited by shanhuang at 2006-5-24 01:32 PM ]

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Post time 2006-5-24 18:03:34 |Display all floors

USA is going to create HYPER INFLATION!

Print its way out of heavy indebtedness....
and make the GOOD LIFE unaffordable by China and the Far East...

Alarm we should!

The game is not over yet...
Just a new form of gaming...


iT GETS interesting!

Green Dragon

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